Capitalisation Method

From the following information, calculate goodwill by (i) Capitalisation Method and (ii) at 3 year's purchase of super profits : (i) Total Assets Rs. 10,00,000 (ii) External Liabilites Rs. 1,80,000 (iii) Normal Rate of Return 10% (iv) Average Net Profit of last five years Rs. 1,00,000

J and K are partners in a firm. Their capitals are: j Rs. 3,00,000 and K Rs. 2,00,000. During the year ended 31st March, 2010 the firm earned a profit of Rs. 1,50,000. Assuming that the normal rate of return is 20% , calculate the value of goodwill of the firm: (i) By Capitalisation Method: and (ii) By Super Profit Method if the goodwill is valued at 2 years' purchase of super profit.

Ajeet and Baljeet are partners in a firm. Their capitals are Rs. 9,00,000 and Rs. 6,00,000 respectively. During the year ended 31st March, 2019 the firm earned a profit of Rs. 4,50,000. Assuming that the normal rate of return is 20% , calculate value of goodwill of the firm: (i) By Capitalisation Method, and (ii) By Super Profit Method if the goodwill is valued at 2 years' purchase of super profit.

From the figures given in Illustration 16, calculate goodwill according to the Capitalisation of Super Profit Method.

A firm earns profit of Rs. 5,00,000. Normal Rate of Return in a Similar type of business is 10% . The value of total assets (excluding goodwill) and total outsiders' liabilities as on the date of goodwill are Rs. 55,00,000 and Rs. 14,00,000 respectively. Calculate value of goodwill according to Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.